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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Class Sues Aviva Life Insurance

SACRAMENTO (CN) - A class action accuses Aviva Life and Annuity Co. of defrauding investors of "tens of millions of dollars" by selling "worthless or sham investments." Also sued are Loomis Wealth Solutions, of Illinois; Lawrence Loomis, Naras Secured Fund #2 LLC, and the Nationwide Lending Group.

Aviva claims to be "the fifth-largest insurance group in the world, and is successor to Amerus Life Insurance and Indianapolis Life Insurance, according to the complaint in Superior Court.

The complaint states: "This is a class action arising from a vast and pernicious conspiracy involving one of the world's largest insurance companies and a series of entities and individuals who together concocted an elegantly sophisticated scheme to defraud class members of tens of millions of dollars. Through the sale of overpriced, worthless or sham investments, Defendants propped up an ever-growing portfolio of hollow assets that eventually caved in on itself. When the house of cards collapsed, the Defendants quickly scattered, disavowing all responsibility and leaving class members with none of their investments and no viable recourse. To make matters worse, those few defendants that did not disappear quickly bought off desperate investors with cheap settlements worth pennies on the dollar, all the while righteously proclaiming their innocence."

The scheme allegedly tied together allegedly free life insurance, offered through "seminars," to the subprime mortgage fiasco.

The complaint continues: "(B)eginning in or about 2006, at least AVIVA, LWS and LOOMIS together concocted an investment scheme designed to generate millions of dollars in fees for themselves by promising free life insurance with lucrative investment potential and fabulous returns on the sale of securities.

"The plan was pitched to potential investors through free seminars presented by LWS and LOOMIS at the behest of, and with the involvement and knowledge of, AVIVA. Defendants targeted well-off potential investors who had significant liquid assets, significant equity in their residence and good credit scores. The insurance was pitched to those investors regardless of whether that product was useful or even appropriate for that particular investor.

"On information and belief, at each seminar, the well-off investors were made the same promises, relied upon the same oral and written representations made by LOOMIS, AVIVA and their co-conspirators. In addition, at the seminars, LOOMIS, who was an authorized agent of AVIVA and actively engaged in the sale of AVIVA products, lured wary investors by promising them that their participation in the Loomis multi-step 'Income Advantage Plan' would, initially, allow them to purchase investment quality life insurance through AVIVA at no cost because the 'Income Advantage Plan' would pay all of their premiums. Because those premiums could be more than $1,000 per month, that 'free' benefit was enough to convince even the most hesitant investors that the 'Income Advantage Plan' was legitimate and potentially beneficial.

"Demonstrating the maxim that nothing is truly 'free,' Defendants were able to finance the initial investment in 'free' life insurance because the seller of that insurance, AVIVA, was secretly funneling $25,000 kickbacks to its co-conspirators for each policy sold. On information and belief, those kickbacks were then used to pay 'investors' the cost of their premiums on a monthly basis.

"In the short term, AVIVA would not generate significant profit on the sale of these "free" life insurance policies, but AVIVA had its eye on the long term. By funding the initial 'investment' in the 'Income Advantage Plan,' and then kicking back enough money to cover the cost of those initial 'investments,' AVIVA was able to procure a long-term customer who had, at the very least, purchased a very expensive insurance policy that was very profitable to AVIVA over the long term. Of course, AVIVA would also then have a customer with significant assets to whom it could pitch various other of its expensive and profitable products.

"AVIVA's participation in this scheme at the outset was absolutely critical to the eventual success of the entire conspiracy because AVIVA's funding of the 'free' insurance products through under the table kickbacks was the linchpin in hooking the investors. AVIVA's continued participation in the funding scheme not only allowed the scheme to continue and to prosper, it allowed AVIVA to continue to collect insurance premiums over a long enough period to allow it to recoup its kickback and thereafter generate hefty profits.

"Once firmly invested in the scheme, participants were then moved from the first step of the plan, buying 'free' life insurance, to the second step of the plan, purchasing securities in the form of shares of the NARAS fund, which was administered, funded and managed by LISMAR and/or NATIONWIDE. At $25,000 per share, Defendants promised lucrative returns on investments in the NARAS fund, supposedly by using the monies generated by the sale of the fund shares to finance residential real property purchases by third parties and/or to take a position in sub-prime mortgages."

The class is represented by Attorneys Against Abuse of Elders, of Sacramento, and Lawrence Salisbury with Majors & Fox of San Diego.

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